[COLOR="Green"]Morgan Stanley: pound forecast's raised[/COLOR]
Analysts at Morgan Stanley increased their sterling forecasts for 2010 and 2011 versus the greenback and the single currency.
According to the specialists, pound will reach $1.43 by the end of 2010 and $1.52 by the end of 2011, while the previous estimate was only at $1.29 and $1.41 respectively. Morgan Stanley expects now sterling to climb to 81 pence per euro by year-end and to 77 pence by the end of 2011, while before they thought that British currency would trade at 90 and 83 pence respectively.
The forecast change is explained by the budget released on June 22 and the prospects of inflation rate growth. The new budget supposes such austerity measures as levy on banks, a higher sales tax and spending cuts. British government plans to reduce the budget shortfall by 113 billion pounds ($169 billion). The country’s inflation rate went up to 17-month maximum at 3.4% in May while the upper limit is set at 3%.
[COLOR="green"]Bof T Mitsubishi: euro and pound will fall versus dollar[/COLOR]
Analysts at Bank of Tokyo Mitsubishi UFJ expect European and British currencies to decline versus the greenback in the coming months. It’s likely to happen, claim the specialists, as fiscal tightening performed by these countries will slow down their growth pace in comparison with the United States.
Bank of Tokyo Mitsubishi mentioned that the austerity measures are done in order to reassure the ratings agencies that, in their turn, acted to provoke financial crisis.
[COLOR="green"]Mizuho: loonie's rising on high oil price[/COLOR]
Canadian dollar rose versus its US counterpart for the first time this week. It happened due to advance of crude oil by 1.2% to $77.41 per barrel on the Nymex and the evidence of American economy’s growth pace slowdown. Strategists at Mizuho Financial Group Inc. claim that loonie will benefit while commodity prices are high.
Some central bank are regarding now the possibility of using loonie as a reserve currency to diversify the reserves declining the share of euro, dollar and yen as this currencies are associated with high debts. Analysts at UBS AG expect the International Monetary Fund may to add Canadian dollar in a basket of currencies it uses in transactions.
[COLOR="green"]Bank of Montreal: risk aversion strengthens yen[/COLOR]
It’s the sixth day in a row when Japanese yen’s rising versus the single currency. Yen’s supported by the expectations that G20 nations won’t be able to find the way out for the indebted euro zone’s countries at this weekend’s meeting.
Strategists at Bank of Montreal in Toronto claim that the market is again dominated by the risk aversion. The specialists point out that there are 2 main strategies. On the one hand, European countries promote austerity measures, while the United States are in favor of spending and stimulus policy. Bank of Montreal says that it’s possible that the summit will produce no outcome.
[COLOR="green"]Bank of Nova Scotia: Canada’s rate unlikely to be raised[/COLOR]
It’s possible to assume watching the derivatives trading that the Bank of Canada won’t lift its key interest rate at each of this year’s four remaining meetings devoted to monetary policy. Yields on December 2010 bankers’ acceptances lost yesterday 6 basis points hitting the minimal level since May 26.
Bank of Nova Scotia’s data shows that the probability that the central bank will increase borrowing costs by 25 basis points at a July 20 meeting dropped from 80% at the start of the week to 67% yesterday.
Economists at Bank of Montreal claim that the recovery of Canadian economy will be slower that it was expected. Canadian retail sales contracted in April falling five times below the forecast and inflation also decreased in May. The specialists believe that the Bank of Canada may raise the rate at its next meeting but then stop for a period of time in order to stimulate the economy.
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